Richie\'s parents have been generous with Richie over the years. Richie is a 21
ID: 2332593 • Letter: R
Question
Richie's parents have been generous with Richie over the years. Richie is a 21 years old and works at a local Hawaiin Shave lce shack while attending college. Richie earned $2,000 at his job and received $4,000 in investment income. When not at school, Richie lived at home. Richie's work income went to pay for his college student life-style (some road trips to away games and eating out with friends). Richie's parents pay for his housing. What is Richie's filing status and tax liability for 2018? (3 pts) .Explanation / Answer
In general, to be a taxpayer’s qualifying child, a person must satisfy four tests:
Exceptions to the Residency Test : The child is considered to have lived with the taxpayer during periods of time when either the child or the taxpayer is temporarily absent due to illness, education, business, vacation, military service, institutionalized care for a child who is permanently and totally disabled, or incarceration. A child who was born (or died) during the year is treated as having lived with the taxpayer for more than half of the year, if the taxpayer’s home was the child’s home for more than one-half of the portion of the taxable year during which the individual was alive. Taxpayers may claim an exemption for a child who was born or died, or was kidnapped, during the year, as long as the other dependency tests are met.
Dependent — a qualifying child must also meet these tests:
Here, for the child all of the above conditions apply.
1) Richie is a US citizen.
2) He is under age of 24 and a full time student.
3) He is the son of his parents (taxpayer).
4) He has not lived with his parents for more than 6 months. However, the exceptions apply to him. He was out for education. So, he is still be considered as qualifying dependent.
5) His work income ($2000) out of $6000 (i.e less than 50%) goes out for his college student life-style. So, he does not support himself for more than 50% amount.
So, he is a qualifying child in his taxpayer;s return.
His income will be included in his parents income tax return.
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